KBRA Credit Profile (KCP), a division of KBRA Analytics, releases research on the environmental performance of District of Columbia-based CMBS office properties.

KCP utilized its environmental, social, and governance (ESG) database to analyze the impact of D.C.’s progressive environmental legislation on securitized and non-securitized commercial real estate (CRE). We compared the environmental profile of 39 D.C.-based CMBS office buildings (the studied cohort) across five metrics—the Energy Star score, site energy use intensity (EUI), source EUI, greenhouse gas (GHG) intensity, and water use intensity—against the broader D.C. and U.S. national office markets. The studied cohort, which collateralizes $3.6 billion in securitized balance, ranges in size from 35,000 sf to 870,000 sf, and averages 277,000 sf. The population included the biggest properties among the 10 largest loans in our Agency and conduit coverage universe, as well as large loan and single-asset single-borrower (SASB) transactions.

Several key themes emerged as we examined the factors driving environmental efficiency:

• Improvements in energy usage and emissions since 2010 are likely the product of infrastructure upgrades and well-designed energy management policies.
• Across the five studied metrics, D.C.-based CMBS office outperformed the broader local market 76% of the time since 2010 and 83% of the time based solely on energy usage metrics (Energy Star and site and source EUI). This is partly driven by the quality of CMBS office properties, with 21 of 39 buildings having received Leadership in Energy and Environmental Design (LEED) certification from the U.S. Green Building Council (USGBC), of which 18 are considered Class A.
• Dramatic reductions in energy consumption and GHG emissions were recorded in 2020, which were likely attributable to lower occupancy rates following pandemic-induced shutdowns. Site and source EUI for the DC office market fell by 20% each in 2020, while GHG emissions fell 36%.

Click here to view the report and visit kcp.kbra.com for more information about KCP’s ESG data offering, which includes social metrics.

About KBRA Credit Profile

KBRA Credit Profile (KCP) is a research service and nothing herein or otherwise provided by KCP shall be construed as a rating. Any rating opinions, analysis, projections, observations, data or other items constituting part of any information provided or distributed by KCP or KBRA are and must be construed solely as statements of opinion and not statements of fact.

About KBRA Analytics

KBRA Analytics, LLC (KBRA Analytics) is our premier product platform for high quality data and advanced analytics. Our seasoned teams of industry specialists across each product provide unparalleled insight creating a foundation of deeper analysis and rapid discovery for users. KBRA Analytics is an affiliate of Kroll Bond Rating Agency, LLC (KBRA). KBRA is a full-service credit rating agency registered in the U.S., designated to provide structured finance ratings in Canada, and with credit rating affiliates registered in the EU and UK.

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